Long-Term Care Admission Agreements: A Trap for the Unwary
Is someone you know helping a loved one transition into a skilled nursing or assisted living facility?
Beware of some hidden traps for the unwary. Imagine coming home to find a letter from a facility or their legal team addressed to you demanding payment for tens if not hundreds of thousands of dollars for services your parent, sibling or family friend received at that facility. This is a reality that many unprepared families and individuals are facing. Unfortunately, this trend is growing at an alarming rate.
Who Is at Risk?
While spouses can easily fall prey to the doctrine of necessaries, which makes spouses financially responsible for medical costs, these demand letters are being addressed to anybody assisting the resident. The facility’s legal claim is often based on the admission agreement that is placed in front of the family members prior to or during the admission process.
During the admission process, an aging or disabled loved one may need to be transported (or has already been transported) to a skilled nursing facility or assisted living facility in order to receive the long-term care services that they need. This is often following an emergency that the family did not foresee. During this time, the facility’s administrative team members rally to produce an admission agreement detailing the terms of the resident’s stay, including the services to be provided along with the fees that correspond with said services. Does the resident ever see the agreement? Almost never – and if they do, they do not normally have the faculties to truly comprehend what is going on in those crucial moments. Rather, it is the family members or close friends of the resident that receive and sign the agreement.
Under federal law, these admission agreements cannot require that someone other than the resident be legally responsible for the facility’s fees. Though financial guarantees are prohibited, many facilities nonetheless manage to obtain such guarantees, whether it is embedded in a separate document or embedded within the admission agreement itself. Understandably, the facilities are simply trying to make sure that their rates, which are rightfully earned, do not go unpaid. Additionally, these agreements will often establish the role of the “responsible party.” Under federal law, a responsible party is responsible for utilizing the resident’s funds for the resident’s expenses, such as their long-term care costs. Due to financial pressures, but despite federal law, many facilities introduce other “responsibilities” to the responsible party. Some agreements will stipulate that the responsible party will take all necessary steps to seek Medicaid coverage for the resident. If Medicaid coverage is not achieved in time, or there is a gap in coverage, the facility will then use this provision to seek payment from the responsible party. Some admission agreements go a step further and include a clause that attempts to make the responsible party personally responsible for the costs incurred by the resident at the facility.
Families who have planned ahead may have New York State statutory powers of attorney in hand to give them the legal ability to stand in the resident’s stead, access the resident’s finances and sign the admission agreement on the resident’s behalf. If the resident did not sign a power of attorney and no longer has the capacity to execute a power of attorney, families may have to seek guardianship authority under Article 81 of the Mental Hygiene Law in order to act on their behalf. Either way, these agreements need to be signed at an alarmingly fast pace when families are at their most vulnerable and focusing primarily on getting adequate care for their loved one. Most of the time, families are not using an attorney during the admission process. Instead, they are relying on the good faith they believe exists in the system for families in their position. In turn, they quickly and blindly sign on the line designated as “responsible party.”
What Is at Stake?
Under the applicable federal regulation, nursing homes are also prohibited from requiring that a third party be personally liable as a condition for admission. Even though the admission agreement may very well make the “responsible party” personally responsible in some capacity, when asked, the staff will often genuinely doubt that the required paperwork makes anyone other than the resident responsible for the care costs. Despite federal law, the facility will then later use the admission agreement as a means to send demand letters to families and friends of the resident and, at times, even initiate collections proceedings and lawsuits. After all, the facility provided a service and is certainly entitled to be compensated for such service. Though these lawsuits are not always successful, and the law is generally on the resident’s side, families will often enter into settlement agreements in order to avoid the stress and expense of having to defend against a collections proceeding.
These facilities can cost anywhere from $13,000 to $25,000 per month, depending on multiple factors including the location, quality and level of care required – and Medicare is not always available to defray these costs, especially not for the long term. A five-month stay can result in a bill ranging from $65,000 to $125,000, if not greater.
What Is a Family To Do?
Planning ahead can help minimize the risk of these legal claims and lawsuits. Quite often, the facility has to file these lawsuits because no one has access to the resident’s funds in a time of crisis. By planning ahead and having a loved one execute a power of attorney, that can be avoided. If there is no power of attorney in place, perhaps the resident themselves can sign the agreement as well as a power of attorney. Most importantly, however, these agreements should never be signed without having an experienced elder law attorney review its terms and provide guidance as to how the particular admission agreement should be handled.
One option, during the admission process, could be having the family refuse to sign the admission agreement. However, this may not always be a viable solution. If the potential resident has not yet been admitted, the facility may rightfully refuse to accept the resident. That said, if the resident is already in the facility and is current in their financial responsibilities to the facility, the facility may not be able to evict the resident simply for having failed to sign an admission agreement. The applicable federal regulations provide for only six situations where a skilled nursing facility can transfer or discharge a resident and although nonpayment is certainly one of these situations, failing to sign the admission agreement is not.
Another potential solution is to have the facility paid through another source, i.e., Medicaid. Unlike Medicare, Medicaid can pay for long-term care services, whether they are provided in the community, such as someone’s home or an assisted living facility, or in an institutional setting, such as a skilled nursing facility. Medicaid is a needs-based program that has strict asset and income limits as well as asset transfer penalty rules. In order to receive coverage in an institutional setting, such as a skilled nursing facility, the resident must have less than the available resource limit ($16,800 for 2022). Further, as part of the application, the applicant must supply five years of financial history and disclose any uncompensated transfers of assets during the five-year lookback period. If there were uncompensated transfers during the lookback period, a penalty period may be imposed. Although the Medicaid system can be daunting for families, elder law attorneys are well-versed in this system and can help guide families in order to minimize private pay periods and get Medicaid coverage sooner.
Families and individuals going through the process of having their loved one placed in a skilled nursing facility can be one of the most stressful experiences during their lifetime. More so, it can unexpectedly open the family to substantial liability. Families should plan ahead by having a power of attorney in place and having the admission agreement reviewed prior to signing. These are just the first steps of many that can help protect the assets they have worked so hard to build, especially as long-term care costs continue to increase.
Nicholas N. Khayumov is an attorney with Littman Krooks. He focuses his practice in trusts, estates, elder law and special needs planning and serves on the Executive Committee of the Elder Law and Special Needs Section as liaison to the Young Lawyers Section. Khayumov received his Juris Doctor from the Benjamin N. Cardozo School of Law. He is licensed in New York and Connecticut and accredited with the U.S. Department of Veterans Affairs.
This article appears in a forthcoming issue of Perspective, the publication of the Young Lawyers Section. For more information about this Section, please see NYSBA.ORG/YLS.
 N.Y. Jud. Law § 412; Family Court Act § 412; Domestic Relations Law § 50; General Obligations Law § 3-301.
 42 U.S.C. §§ 1395i-3(c)(5)(A)(ii), 1396r(c)(5)(A)(ii).
 42 C.F.R. § 483.15(c)(1)(i).
 See GIS 21 MA/25, https://www.health.ny.gov/health_care/medicaid/publications/docs/gis/21ma25.pdf, and GIS 22 MA/01, https:+//www.health.ny.gov/health_care/medicaid/publications/docs/gis/22ma01.pdf.